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Highlights

GAO reviewed the reliability of the cost information critical to capital investment decisionmaking on air traffic control (ATC) projects, focusing on the Federal Aviation Administration's (FAA) processes for estimating what projects will cost and the related accounting for actual project costs.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Transportation The Secretary of Transportation should direct the FAA Administrator to institutionalize defined processes for estimating ATC projects' costs. At a minimum, these processes should include a corporate memory (or historical database), which includes cost and schedule estimates, revisions, reasons for revision, actuals, and relevant contextual information.
Closed - Implemented

Recommendation status is Closed - Implemented.

FAA has established a corporate history database, which includes information on projects' estimated costs and schedules, revisions to these estimates, and relevant contextual information. However, the corporate history data base does not include data on actual costs.
Department of Transportation The Secretary of Transportation should direct the FAA Administrator to institutionalize defined processes for estimating ATC projects' costs. At a minimum, these processes should include structured approaches for estimating software size and the amount and complexity of existing software that can be reused.
Closed - Implemented

Recommendation status is Closed - Implemented.

FAA has instituted cost estimating processes that call for the use of standard cost estimating tools. These tools provide a structured approaches for estimating software size and software reuse.
Department of Transportation The Secretary of Transportation should direct the FAA Administrator to institutionalize defined processes for estimating ATC projects' costs. At a minimum, these processes should include cost models calibrated and tuned to reflect demonstrated accomplishments on past projects.
Closed - Implemented

Recommendation status is Closed - Implemented.

FAA has instituted cost estimating processes including guidance on calibrating cost models to reflect past performance.
Department of Transportation The Secretary of Transportation should direct the FAA Administrator to institutionalize defined processes for estimating ATC projects' costs. At a minimum, these processes should include audit trails that record and explain all values used as cost model inputs.
Closed - Implemented

Recommendation status is Closed - Implemented.

FAA agreed with this recommendation and has instituted cost estimating processes that include audit trails which record and explain cost model inputs.
Department of Transportation The Secretary of Transportation should direct the FAA Administrator to institutionalize defined processes for estimating ATC projects' costs. At a minimum, these processes should include processes for dealing with externally imposed cost or schedule constraints in order to ensure the integrity of the estimating process.
Closed - Implemented

Recommendation status is Closed - Implemented.

FAA has instituted cost estimating processes which include a means for dealing with externally imposed cost and schedule constraints. FAA officials explained that this is handled through the use of cost models, which allow cost estimators to factor in such constraints.
Department of Transportation The Secretary of Transportation should direct the FAA Administrator to institutionalize defined processes for estimating ATC projects' costs. At a minimum, these processes should include data collection and feedback processes that foster capturing and correctly interpreting data from work performed.
Closed - Implemented

Recommendation status is Closed - Implemented.

FAA agreed to implement the recommendation and has initiated data collection and feedback practices that foster capturing and correctly interpreting data from work performed. Specifically, the agency has implemented lessons learned meetings after a system's implementation and is using earned value management and the Simplified Information Reporting Evaluation System, (SPIRE) database to track and analyze variances in estimated costs and schedules. However, because FAA does not yet capture actual costs, this information cannot yet be effectively fed back into the cost estimating process.
Department of Transportation The Secretary of Transportation should direct the Administrator, FAA, to immediately begin disclosing the inherent uncertainty and range of imprecision in all ATC projects' official cost estimates presented to executive oversight agencies or the Congress.
Closed - Implemented

Recommendation status is Closed - Implemented.

FAA is encouraging product teams to disclose the inherent uncertainty and range of imprecision when briefing executive oversight agencies and the Congress on individual projects' costs. However, this information is not required.
Department of Transportation The Secretary of Transportation should direct the Administrator, FAA, to report to the Secretary and FAA's authorizing and appropriation committees on progress being made on these recommendations as part of the agency's fiscal year (FY) 1999 budget submission.
Closed - Not Implemented

Recommendation status is Closed - Not Implemented.

While FAA concurred with this recommendation, the agency did not report to the Secretary of Transportation and FAA's authorizing and appropriation committees on progress being made on these recommendations as part of the agency's fiscal year 1999 budget submission.
Department of Transportation In light of FAA's weaknesses in accounting for and reporting ATC project costs, the Secretary of Transportation should direct the FAA Administrator to acquire or develop and implement a managerial cost accounting capability that will satisfy the requirements of SFFAS 4, Managerial Cost Accounting Concepts and Standards for the Federal Government. This system capability should provide the cost accounting and financial management information needed by FAA management and those who make investment decisions. Such information should include full life cycle costs, which include the costs of resources consumed by a project that directly or indirectly contribute to the output and the costs of identifiable supporting services provided by other organizations within the reporting entity.
Closed - Implemented

Recommendation status is Closed - Implemented.

FAA concurred with the recommendation and has undertaken a major initiative to develop a system in compliance with financial standards. To date, FAA has made substantial progress in developing its cost accounting system, and has implemented a portion of the system. However, FAA still has much work to do to implement a full cost accounting capability.
Department of Transportation The Secretary of Transportation should report FAA's lack of a cost accounting capability for its ATC modernization as a material internal control weakness in the Department's fiscal year 1996 Federal Managers' Financial Integrity Act report and in subsequent annual FMFIA reports until the problem is corrected.
Closed - Not Implemented

Recommendation status is Closed - Not Implemented.

FAA states that its lack of a cost accounting capability is not a material weakness.

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